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The business proposition of open aid data: Why every U.S. agency should default to transparency

June 30, 2015

This is a guest post from Sheila Herrling, Senior Vice President for Social Innovation at the Case Foundation and member of Publish What You Fund’s U.S. Advisory Committee

I’m a big believer in transparency. And not just because it’s the “right thing to do” but because it’s the “smart thing to do” if you care about maximizing your results and keeping your client base. These business principles, increasingly being embraced by disruptive companies, should apply equally to the aid business, desperately in need of disruption.

Check out how Buffer put the principle of transparency into practice in their company. Extreme? Perhaps, but there’s something to the “default to transparency” operating principle that really resonates. And there’s definitely something to making it a core value – core values (if they’re real) then serve as both the conscience and the backbone of all company decisions. Why? Because they make good business sense:

Transparency breeds trust; trust breeds stronger and smarter execution teams; stronger execution maintains your client base. I love this HBR piece citing Bilk to Last quote: “as standards for trustability continue to rise, the companies, brands and organizations shown to lack trustability will be punished more and more severely.” Same should be true for aid organizations.

A cost-benefit analysis of transparency and open data shows benefits vastly outweighing costs (the often cited reason agencies give to why they can’t do it). Check out Aidinfo research showing the cost of aid signatories meeting IATI implementation = $4-8 million (most one-off costs); the benefit = $7 million per year from reduced duplicate manual reporting; ability to then direct talent and attention to actually delivering results = priceless.

Transparency is a huge internal management tool. Open data and transparency of decision making helps avoid internal staff distraction that detracts from a focus on delivering services. And it exposes lots of eyes to finding efficiencies and cost savings – see PLAN USA’s great story. MCC (full disclosure: I led the agency’s move to open its data and drive toward IATI implementation standards) published a terrific learning piece on its efforts.

Transparency and open data help spur innovation. Today’s development challenges are only growing, putting real urgency to the aid industry’s ability to collaborate, share information on what works (and doesn’t!), open their data for uses and solutions one may never have dreamed of. Note: if you haven’t read Simon Johnson’s How We Got to Now, you must! Who would have thought that the invention of flash photography led to anti-poverty programs.

Transparency respects and maintains your client base – those people your products or services are intending to serve. And not just transparency on how much you spend but how well you executed. The aid industry is getting better at showing how much it spends, but has a long way to go on whether that spending is achieving results and if not, why not. Donors should want this so they can put resources toward learning and scaling success. But perhaps more importantly, citizens in developing countries (whom I would argue are the real clients) should have all the information from all the donor agencies compatible with their own budget systems in order to maximize the chances of delivering on their own citizen-driven development agenda. I love Owen Barder’s 2011 blog which captures this well.

Like any good business, the aid industry should be driven by the business proposition that transparency makes good economic sense. That will bring about sustainable open data, will drive needed innovation in the space and will focus more attention on the learning necessary to iterate and deliver more and better results.

I anxiously await tomorrow’s release of Publish What You Fund’s 2015 U.S. Aid Transparency Review. In it, we will gain insights into progress made on meeting the Busan deadline, where donors committed to fully publish their aid to a timely and comparable standard – the International Aid Transparency Initiative – by the end of 2015. Let’s hope the economic and business case for transparency is taking greater hold!